Shortly after the United States Securities and Exchange Commission (SEC) submitted, under seal, its opening remedies-related brief in the case against blockchain company Ripple, insiders revealed that the regulator is demanding a whopping $2 billion in damages.
As it happens, Ripple’s chief legal officer Stuart Alderoty has recently shared that the brief includes the SEC’s demand for “$2 billion in fines and penalties,” adding that the agency “trades in statements that are false, mischaracterized, and designed to mislead,” according to his X thread on March 25.
Furthermore, Alderoty stated that the securities regulator was resorting to scare tactics against the entire cryptocurrency sector rather than focusing on its job. Specifically, “rather than faithfully apply the law, the SEC remains bent on wanting to punish and intimidate Ripple – and the industry at large.”
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Reflecting on the fact that the securities watchdog is seeking $2 billion from Ripple, legal expert and popular commentator on the XRP lawsuit Bill Morgan said that this was no surprise, considering that the “SEC always overreaches in its cases against crypto companies and projects.”
Trouble for Ripple?
After the SEC’s motion became public, Morgan explained it presents a “possible problem for Ripple beyond this case,” as the SEC can “argue that there were two groups of institutional sales investors (…), and Ripple offered one group significant discounts in XRP price over the group that did not receive them.”
Furthermore, as he pointed out:
“The SEC argues that the selective offering of discounts to some institutional sales investors and not others harmed the institutional sales investors that did not receive the discounts. On assumptions it makes, it asserts that the harm was $480 million. Those assumptions need to be tested. The evidence of causation of this alleged harm seems thin.”
Additionally, Morgan highlighted that, as the “SEC asserts that the sales at discounts to some institutional sales investors put downward pressure on the market price of XRP,” it could increase the risk of lawsuits from those investors allegedly harmed by non-disclosure of discounts to other institutional investors.
“As these sales to institutions were found to be investment contracts, it means that this offering of discounts to some but not other institutions is the very disclosure according to the SEC that should have, and would have been made to the institutions if the sales to institutions had been registered.”
At the same time, Ripple CEO Brad Garlinghouse commented on the developments, stressing that the XRP lawsuit “involved no allegations (let alone findings) of fraud and recklessness” from his company’s side, and that they would “continue to expose the SEC for what they are when we respond to this.”
Meanwhile, the XRP price today stood at $0.6439, recording an increase of 2.64% on the day, gaining 9.68% across the week, as well as advancing 21.10% on its monthly chart, according to the most recent price information retrieved by Finbold on March 26.
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